May 26, 1908: Mideast Oil Discovered – There Will Be Blood

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May 26, 1908: Mideast Oil Discovered – There Will Be Blood

__1908: __A British company strikes oil in Persia (now Iran). It's the first big petroleum find in the Middle East, and it sets off a wave of exploration, extraction and exploitation that will change the region's – and the world's – history.Englishman William D'Arcy had obtained a license to explore for oil in Persia in 1901. He sent explorer George Reynolds, who searched fruitlessly for seven years.Fresh investment from the Burmah Oil Co. had rescued the expedition financially in 1904, but with no results and D'Arcy's personal fortune completely run out, he risked losing his two country houses and his London mansion. In Persia, staff was already being dismissed. Reynolds received orders from London for his last-chance well: Drill to 1,600 feet and then stop.Why all the fuss? The automobile was in its infancy, and few people could foresee its future. How did an investor expect to get rich off an oil strike? Well – and we really do mean well – you could run an electric-power plant with oil, you could run factory machinery on oil and, perhaps most importantly, the world's powerful navies were converting their ships from coal to oil. Almost anything that had run on coal – especially coal that heated water to create steam – could run on oil.Exactly 100 years ago today, the smell of sulfur hovered in the air at Masjid-i-Suleiman. That was a good sign for an experienced oil hand like Reynolds. At 4 in the morning, the drill reached 1,180 feet below the desert and struck oil. A huge gusher shot 75 feet into the air.The site was so remote that it took five days before D'Arcy got word by telegram in England. "If this is true," he replied, "all our troubles are over." It was indeed true, and more wells hit oil elsewhere in Persia, including a huge one in September.D'Arcy and Burmah reorganized their holdings in 1909 as the Anglo-Persian Oil Co. (which became the Anglo-Iranian Oil Co. in 1935, British Petroleum in 1954 and BP in 2000.) Its initial public offering of stock shares sold out in 30 minutes in London. People stood five deep around the tellers' cages to buy shares in Glasgow. The race for oil accelerated throughout the Middle East.At the instigation of First Lord of the Admiralty Winston Churchill, the British government became a majority (and at-first secret) shareholder of Anglo-Persian during World War I. Britain soon became a dominant power in Persian and later Iranian politics. British and American political operations in that nation shaped the developments that led to the Iranian revolution in 1979 and the current Middle Eastern power situation.Source: Various